Virgin Atlantic Case Study: Structure, SWOT, and PESTLE Analysis

This case study provides an analysis of Virgin Atlantic's business organization, focusing on its functional organizational structure and the internal and external factors influencing its operations. The report identifies the benefits and drawbacks of the functional structure for Virgin Atlantic, highlighting improved efficiency but also potential delays in decision-making. It applies SWOT analysis to assess the company's strengths, weaknesses, opportunities, and threats, particularly in the context of competition and economic conditions. Furthermore, the PESTLE model is used to examine political, economic, social, technological, legal, and environmental factors impacting Virgin Atlantic, revealing both opportunities and challenges for the airline. The study concludes that while the functional structure enhances operational efficiency, the company must strategically address external factors to ensure sustainable growth and development in the aviation industry. Desklib offers a wealth of similar case studies and solved assignments for students.

UNDERSTANDING
BUSINESS
ORGANIZATION

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Organizational Structure..............................................................................................................3
Drawbacks of functional structure for Virgin Atlantic................................................................4
Business environment..................................................................................................................4
SWOT analysis............................................................................................................................5
PESTLE analysis.........................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
Books and Journals......................................................................................................................8

INTRODUCTION
For developing better understanding of the organization, it is necessary to determine their
organizational and how the external & internal forces prevailing in the business environment are
affecting the functioning of the organization. The present case study would revolve around the
case of Virgin Atlantic which is one of the British airline located in Crowley, England. It was
founded in 1984 and the airline company currently uses mixed of fleets such as Boeing wide
body aircraft and Airbus and accordingly, operates in different destinations like Africa, North
America, the Caribbean, the Asia, the Middle East, etc. through their main & secondary base at
Heathrow and Manchester respectively. Around 5000 employees have been hired by the
company and due to its management’s effective contribution towards the policies of the
company, Virgin Atlantic is having strong reputation in terms of safety for its passengers.
In this case study, the organizational structure of Virgin Atlantic will be identified and
accordingly, its benefits and drawbacks to the organization will be discussed. Further, the
meaning of business environment will be stated followed by the meaning of SWOT analysis.
Post discussing the meaning of SWOT analysis, the strengths, weaknesses, opportunities and
threats would be identified with reference to the Virgin Atlantic. Next, the second model which
is suitable for environmental analysis that is, PESTLE would be discussed where at first hand its
meaning would be stated and then the political, economic, social, technological, legal and
environmental factors will be discussed with regards to the Virgin Atlantic.
MAIN BODY
Organizational Structure
Organizational structure can be defined as that structural framework through which it can
be determined how activities like task allocation, supervision and coordination are carried out for
attaining the desired organizational goals (Hamilton and Webster, 2018). Virgin Atlantic
followed the functional structure where they have undertaken to group their employees in
different areas based on the functions they performed through their specialization & skills. Due
to having small size as compared to other large size organization operating in airline industry,
thus the functional structure has been found to be the best structure for the company as it makes
management & controlling easier. Further, this structure is beneficial for Virgin Atlantic because

they are cost conscious and accordingly, this structure proves to be dynamic for them in terms of
adapting to changing needs of the business. The biggest advantage of functional structure lies in
improved efficiency of the organization because of this structure being easily manageable &
controllable.
Benefits of functional structure for Virgin Atlantic
 By keeping people with similar skill set and specialty, it is possible for the organization
to establish high level of clarity among its employees (Samah and et.al., 2019).
 Reduced production cost is another benefit for the companies whereby classifying their
staff on the basis of specialization, this led to individual department performing unique
tasks which in turn results in greater efficiency and possibility of attaining company’s
goal.
Drawbacks of functional structure for Virgin Atlantic
 Functional structure by grouping on the basis of specialization and skills of employees
have great impact over the operational efficiency of the business because discussions and
meeting took place with department heads or coworkers only which may delay the
process of decision making that is required to be taken immediately. Accordingly, overall
progress of the team gets affected.
 Always being and aiming to achieve the goals of the single department, employees
usually have no or little knowledge of relationship between organizational objectives and
their role.
Business environment
It can be defined as the summation of all the factors either categorized as internal or
external factor such as customer needs, employees, management, suppliers, technological
innovation, economic changes, social trends, etc. All these forces or factors prevailing in the
internal or external environment of the business affect its operations in a great way which may be
direct or indirect both (Kovaçi and et.al., 2021).

SWOT analysis
SWOT is one of the most commonly used method for the evaluation of strategic planning
and competitive position of the company in the market. Through this analytical model, the
assessment of external & internal factors is done to determine the current as well as future
potential of the organization.
The following are the strengths, weaknesses, opportunities & threats pertaining to the Virgin
Atlantic:
Strengths
 The company due to having efficient services and strong foundation is able to fight with
the current inflationary situation in several nations of the globe. Through efficient
services, they are able to kept their prices comparatively low as compared to other
players in the market and accordingly, attracts customers on a larger scale (Benzaghta
and et.al., 2021).
 Further, the company is known as the trendsetter of the industry within the airline
segment, and therefore, is regarded as one of the most innovation player in the market.
Such strength is helpful in emerging situation like pandemic in terms of identifying the
best alternative to overcome the worst scenario.
Weaknesses
 Due to the cut throat competition prevailing in the airline industry, Virgin Atlantic have
limited potential to grow their market share.
 Company is facing capital inadequacy because of its inability to raise capital from the
market due to having private partnership structure.
Opportunities
 Virgin Atlantic have an opportunity to enhance its global presence through forming
alliances.
 Further, due to having strong brand image and efficient services, this airline company can
further penetrate in the global market.

Threats
 As result of political instability and current inflation, the company is having threats like
changing regulations and rising cost of fuel in the aviation industry.
 Further, the competition in aviation industry of European market is much high providing
less potential to grow margins (David, Creek and David, 2019).
PESTLE analysis
It is another analytical tool through which external factors affecting that could affect the business
in both positive & negative manner are identified. As a result, company can have both
opportunities & threats due to the existence or changes taking place in these external
environment factors which involves political, economic, technological, social, legal and
environmental factors. Thorough study and understanding of these factors is crucial for the
management in order to perform decision making activities strategically. The following is the
analysis of Virgin Atlantic with reference to the PESTLE analysis model.
Political: Airline industry usually gets greatly affected by political factors like labor law, taxation
policies and trade restrictions resulting from political instability. Virgin Atlantic faces severe
control from the government over their business operations while expanding to foreign nations in
terms of licensing and bureaucratic requirements set by foreign government (Stevenson and
Marintseva, 2019).
Economic: Virgin Atlantic has faced cut throat competition from major players of the UK airline
industry such as UK airways and American Airlines leading to forceful reduction in the flight
rates by the company. For overcoming the negative implications of high competition, the
company has made several inventions such as limousine pick up for those travelling as a first
class passengers and for those as an economic passengers, there were a system known as seat
back video entertainment system. As a result of such decisions, the company has created more
opportunity for increasing its customer base and accordingly profit margins.
Social: Unrest caused by ATC (Air traffic controller) union strikes leads to severe attacks over
the passengers travelling through airways leads to cancellation of several number of flights by
Virgin Atlantic. This is considered to be more unfavorable social factor outside the control of the
airline companies when such strikes took place in peak season.

Technological: With the rise in internet usage, the competition has become more severe as it
allows passengers to compare flight rates offered by different airlines in a fraction of second.
There is an opportunity to cut cost for the Virgin Atlantic by investing more in IT based
passenger service systems which includes self service booking technology, mobile app leading to
improved customer satisfaction (Matovic, 2020).
Legal: Several laws and regulations pertaining to foreign land such as labor laws, pricing
regulations, Minimum wage systems, etc. are hindering the company’s way towards increasing
their global presence in the desired nation.
Environmental: Virgin Atlantic usually faced with sustainable working as a result of several
environmental changes such as floods, droughts, severely hot and zero temperature, etc. The
knowledge of the same among target audience leads to cancellation of travelling at certain points
of time and even flight cancellations as a result of poor weather conditions.
CONCLUSION
From the above report based on developing understanding of the business organization
that is Virgin Atlantic, it has been identified that the company has adopted functional
organizational structure where the staff are segregated among different departments based on
their specialization & skills. This leads to greater operational efficiency for the business but may
result in departments working in isolation by concentrating on just attaining their departmental
goals instead of focusing on overall organizational objectives. Further, through the application of
SWOT analysis model, the assessment has been done with regards to the strengths, weaknesses,
threats and opportunities for the Virgin Atlantic in the aviation industry of UK. At last, the
application of PESTLE model facilitates the identification of how key external factors prevailing
in environment that cannot be controlled by the company are proving Virgin Atlantic with
opportunities as well as threats in further growing & developing.

REFERENCES
Books and Journals
Benzaghta, M. A., and et.al., 2021. SWOT analysis applications: An integrative literature
review. Journal of Global Business Insights, 6(1), pp.55-73.
David, F. R., Creek, S. A. and David, F. R., 2019. What is the key to effective SWOT analysis,
including AQCD factors. SAM Advanced Management Journal, 84(1), pp.25-35.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Kovaçi, I., and et.al., 2021. Organization as a Function of Management and the Types of
Organizational Structures that Apply in SMEs in Kosovo. Calitatea, 22(181), pp.3-6.
Matovic, I. M., 2020. PESTEL analysis of external environment as a success factor of startup
business. ConScienS, p.96.
Samah, I. H. A., and et.al., 2019. Functional Organizational Structure And Employee
Engagement In Malaysian Hotel Sector. International Journal Of Scientific & Technology
Research, 8(12), pp.3454-3456.
Stevenson, I. and Marintseva, K., 2019. A review of Corporate Social Responsibility assessment
and reporting techniques in the aviation industry. Transportation research procedia, 43,
pp.93-103.